Compliance Assessment Summary Report: Marché Daoust

Context

At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Samson & Associés CPA / Consultation Inc. performed a desk compliance assessment of the Funding Agreement between Nutrition North Canada (NNC or the 'Program’) and Marché Daoust (Recipient). Nutrition North Canada is a Government of Canada Program that helps make nutritious food and some essential items more affordable and more accessible to northern communities. The purpose of the assessment, in accordance with our engagement with NNC, was to provide information on:

• Whether the Recipient is passing on the full value of the subsidy to consumers;
• Whether the amounts disbursed to the Recipient through the fiscal years 2019/2020 through 2021/2022 were appropriately claimed in compliance with the Terms and Conditions of the Recipient’s Funding Agreement;
• Whether program visibility requirements are met and that the subsidy is transparent to consumers;
• The Recipient’s reporting and claiming systems and procedures with regard to gaps and controls issues; and
• Whether the Recipient respected program rules in regard to sales to ineligible clients.

The period covered by the compliance assessment is from April 1, 2019, until March 31, 2022. We determined our sample size by applying professional judgement based on the frequency of claims and the number of items in each claim.

The compliance assessment was performed as a desk audit. As a result, our interviews were performed based on electronic communication with the Recipient to identify and document their key control activities, their procedures and processes related to the claim of funds to NNC, program delivery and reporting. Consequently, our interviews were conducted on the basis of electronic communications with the recipient in order to identify and document its main control activities, procedures and processes related to claiming funds from NNC, program implementation and reporting.

We subsequently performed detailed audit procedures on the accuracy and validity of the Recipient’s claims and on the margin earned by the Recipient on the subsidized products.

Based on the procedures performed and as more fully described in the report, we did not find any significant deviations in the samples we selected; however, we identified improvements in the form of recommendations to improve the Recipient’s control environment in relation to the Program.

Conclusions

Overall, we are of the opinion that the funding provided to the Recipient was spent for the intended purposes and in compliance with the terms and conditions for the 2019-20 to 2021-22 Funding Agreements signed with the Department.

• Except for the errors noted under section 5.1.1 we can confirm that the amounts disbursed to the Recipient over three fiscal years (2019/20 – 2021/22) were appropriately claimed, in accordance with the terms of the recipient's funding agreement, and the sample did not reveal any overpayments. Furthermore, we are of the opinion that the contribution for which reimbursement is requested is related to the type and nature of eligible costs required by the NNC program.
  With the exception of the cases noted in section 5.2 and the absence of program signage on the third-party retailer's premises and on the Recipient's website, the Recipient adheres to the visibility requirements detailed in the Recipient's program manual. Furthermore, in relation to objective #2a) and #2b), the requirements are not applicable since the beneficiary is a southern supplier.
• Our discussions with the recipient have shown that he is aware of the requirements preventing the sale of subsidized products to ineligible companies and establishments, and our review found no sales to ineligible companies and establishments;
• The Recipient is using the most effective and cost-effective supply chain arrangements and routes;
• Our review can confirm that the Recipient’s database is appropriately coded.
• Our review showed that the database used by the beneficiary was appropriate.
• Based on our review and discussions with the Recipient, we can conclude that the subsidy is not eroded by the prices set for the Recipient's customers. Our review determined that the third-party retailer Dépanneur Newviq'vi transferred the contribution to the customer.
• Five recommendations were identified to improve the Recipient’s management systems, processes and practices that would address the deficiencies noted.

The table below summarizes the recommendations identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.